SINGAPORE/SEOUL (Reuters) - A new North Sea crude marketed by Norway’s Equinor (EQNR.OL) is making inroads into Asia’s top oil importers, with several cargoes set to arrive in China, India and South Korea in the coming months, refining officials and trade sources said.
Buyers of Johan Sverdrup crude included South Korea’s Hyundai Oilbank Corp [INPTVH.UL], India’s Reliance Industries Ltd (RELI.NS) and several independent refineries in China, they said.
Johan Sverdrup, the largest North Sea discovery in more than three decades, is one of two oilfields operated by Equinor that started production in the second half of this year.
Asian buyers have quickly warmed to the new grade as its price is competitive compared with oil from other suppliers such as Oman, Brazil and Angola, while a lower sulphur content makes it easier to refine, the sources said.
Reliance and Hyundai Oilbank also have a preference for heavier grades that contain more residue which can be upgraded into more lucrative fuels, they said.
A Hyundai Oilbank spokesman said the purchase was part of its efforts to diversify crude supply sources.
(GRAPHIC: New North Sea crude oil marketed by Norway’s Equinor is making inroads into Asia - here)
Reliance did not respond to a request seeking comment.
Unipec, the trading arm of Asia’s top refiner Sinopec, loaded the first Johan Sverdrup crude cargo last month which will arrive in southern China in December.
Hyundai Oilbank’s 2-million-barrel cargo and Reliance’s 1 million-barrel cargo will also be discharging in December, shipping data on Refinitiv Eikon showed. There is also a 1-million barrel cargo on its way to Fujairah in the United Arab Emirates, according to the data.
It takes about 35 days to ship Johan Sverdrup crude from Norway’s Mongstad port to South Korea or China’s Shandong province, the data showed.
Equinor, which holds a majority stake in the Johan Sverdrup oilfield, is marketing the new oil to Chinese independent refineries, competing head on with Brazil’s Lula crude and Angolan oil, Chinese refinery sources said.
So far, Sinochem Hongrun Petrochemical Co and Shandong Qingyuan Group, have bought the new grade, two sources with knowledge of the matter said. Dongfang Hualong Group has also bought the new grade, one of the sources said.
The crude has been sold at premiums of around $6 a barrel to ICE Brent delivered to Shandong, for January-loading cargoes that will arrive in February, the sources said.
The price was similar to that of Oman crude, they said, which is unusual because sour, or high-sulphur, crude like Oman is usually cheaper than sweet crude.
Johan Sverdrup crude has an API gravity of 27.2 degrees and contains 0.82% sulphur.
Production at the Johan Sverdrup oilfield is expected to reach 440,000 barrels per day in summer of 2020. Other shareholders include Sweden’s Lundin Petroleum (LUPE.ST) Norway’s state-owned Petoro, Aker BP (AKERBP.OL) and France’s Total (TOTF.PA).
Reporting by Shu Zhang and Florence Tan in SINGAPORE, Jane Chung in SEOUL, Nidhi Verma in NEW DELHI; editing by Kim Coghill and Jason Neely